I'm new to this so please be patient. As I understand it if you do the wrong thing with Google and Yahoo, you can be penalized. I know someone who has purchased several domain names that all point to her main website. Is it allowable by Yahoo and Google to submit all of her other (very relevant) urls to these search engines?

In most cases this is allowable as long as users cant reach the same content via different URLs. If you want PM me the URLs and I'll have a look! :)

I'm not sure that I understand the answer. Here is my (hypothetical) example: www.clothingforwackywomen.com also purchased www.crazyladyclothes.com, www.cookyladyclothes.com and www.insaneladyclothing.com. The additional websites point to www.clothingforwackywomen.com. Can I still submit the urls to the search engines separately?

Can I still submit the urls to the search engines separately?
Yes, but from what you said there would be no content only a redirect. So the time you spent to submit a non-site might be better spend making actual content.

As long as the content at one URL is not also at another URL you are Ok!

Examples: iphone.com, ipod.com and/or gmail.com.

Now I understand. Thank you.